June PMI up, but weak demand limits recovery potential

| 0 Comments

Headwind_100.jpgThe seasonally-adjusted Absa Purchasing Managers' Index (PMI) rose to 46.2 index points in June 2019, up from 45.4 in May 2019. "The average level for Quarter 2 of 2019 was 46.3 points, below the level recorded in Quarter 1 of 2019", said the Bureau for Economic Research (BER) in a statement.

In contrast, available official statistics suggest that quarterly manufacturing output is set to rebound strongly in Quarter 2 after a dismal first quarter. "However, part of this rebound is driven by a normalisation in output after load shedding disrupted production earlier in the year", explained BER.

In fact, the PMI survey suggests that underlying demand conditions remain weak, which limits the possibility of a sustained recovery in output going forward.

The index tracking expected business conditions in six months' time declined by a significant 6.7 points after remaining unchanged in May 2019. Part of this could be owing to the reported decline in export orders in June, with the expectation of slower global growth foretelling that export demand will likely remain under pressure in the coming months.

In June, only one of the five major sub-components came in above 50 points: the index tracking supplier deliveries. This index rose to a lofty 56.9 points from 55.7 in May.

The Business Activity Index rose by 1 point in June after a 6.1-point drop in May. Excluding December 2018, the Output Index has been stuck below the neutral 50-point mark since early 2018. "This means that respondents are reporting sustained pressure on production, which is unlikely to turn around without a meaningful recovery in demand", noted BER.

The New Sales Orders Index rose slightly in June but failed to recover the full extent of May's losses. At 46.2 points, the index has now been below the neutral 50-point mark for five straight months. Respondents reported a notable drop in exports during the month of June. It remains to be seen whether this will be sustained. However, it is consistent with the decline in the PMIs of some of South Africa's key export markets, including Europe. "Slower global growth is likely to weigh on South African manufacturing exports going forward", opined BER.

The Inventories Index also increased in June after declining in the preceding two months.

The only major sub-component of the headline PMI to decline compared with May was the Employment Index. Worryingly, the Employment Index recorded its worst quarter since 2009, which does not bode well for potential job creation in the sector.

Meanwhile, purchasing prices edged higher in June after two straight declines. The uptick was likely driven by a weaker Rand exchange rate, which pushes up the cost of imported raw materials and intermediate products.

Finally, after three consecutive declines, the Purchasing Inventories Index edged up in June. However, despite the 1.8-point increase, the index remained well below the neutral 50-point mark.

Leave a comment


 

 

Career opportunites

Procurement Manager

  • >500 000 Gauteng Permanent Procurement Management
Job purpose We are looking for a Procurement

Fresh Demand Planner/Supply Chain Analyst

  • Analyst Operations, Planning & Inventory Permanent Supply Chain Western Cape
(Jnr - Mid Level), Supply Chain Planning, Based

Groceries Demand Planner/Supply Chain Analyst

  • Analyst Operations, Planning & Inventory Permanent Supply Chain Western Cape
(Mid Level) Supply Chain Planning, Based at Kenilworth,

Category Implementation Manager

  • >500 000 Gauteng Permanent Projects / Category Management Supply Chain
As an Executive Search and Career Consultant specializing

Head of Procurement

  • >500 000 Gauteng Permanent Procurement Management Strategic Sourcing
As an Executive Search and Career Consultant specializing

Regional Sourcing Manager

  • >500 000 Gauteng Permanent Procurement Management Strategic Sourcing
As an Executive Search and Career Consultant specializing

Procurement Director

  • >500 000 KwaZulu Natal Permanent Procurement Management Strategic Sourcing
As an Executive Search and Career Consultant specializing

Procurement Specialist

  • >500 000 Buyer Gauteng Permanent Procurement Officer / Specialist
As an Executive Search and Career Consultant specializing

Senior Sourcing Manager

  • >500 000 Gauteng Permanent Procurement Management Strategic Sourcing Supply Chain
As an Executive Search and Career Consultant specializing

Indirect Sourcing Programme Manager

  • >500 000 Contract Projects / Category Management Strategic Sourcing Western Cape
As an Executive Search and Career Consultant specializing

Deputy Chief Commercial Officer

  • >500 000 Contract Gauteng Procurement Management Supplier / Business Development
As an Executive Search and Career Consultant specializing

GROUP PROCUREMENT MANAGER

  • Gauteng Permanent Procurement Management Supplier / Business Development
Operating out of Johannesburg, this is a key

Tutor and Coordinator

  • Gauteng Operations, Planning & Inventory Permanent Procurement Management Supplier / Business Development
Purpose of the job: To plan, coach, advise

Commodity Manager

  • <500 000 Commodities Gauteng Procurement Management
Are you a Commodity Manager looking for the

Supply Chain Professional

  • <500 000 Gauteng Procurement Management Supply Chain
I specialize in placing professionals in the Supply

Supply Planning

  • <500 000 Gauteng Operations, Planning & Inventory Supply Chain
Seeking dynamic candidates to take to the market

Industrial Engineer

  • <500 000 Gauteng Industrial Engineer Procurement Consultant
Are you an Industrial Engineer looking to make

Logistics Manager

  • >500 000 Gauteng Logistics & Warehousing Supply Chain
Seeking vibrant industry specific individuals seeking new opportunities

Operations Manager

  • <500 000 Gauteng Operations, Planning & Inventory Procurement Management
Looking for an Operations Manager to take into

Supply Chain Systems Administrator

  • >500 000 Gauteng Procurement Management Strategic Sourcing Supply Chain
One of South Africa's leading, mining companies is